Venture interests spring over bottled VTY

October 07, 2008 09:34:23 PM

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The Flour Mills of Fiji Group (FMF) is in talks with a few local companies who are interested in a partnership venture.

The venture will involve the sourcing, bottling and packaging of FMF’s bottled natural water, VTY.

FMF’s company secretary, Kumar Shankar, told FijiLive that the company was in negotiation with a few locally-owned firms which are also current players in the water bottling industry.

“We have identified two to three good water sources in the Western Division that are owned by companies who are interested to venture with us,” Shankar said.

“When you look at it from a water manufacturer’s point of view, the source of raw material is water availability.

“What they to do is process it, bring it to good quality, bottle it and sell it. So there is no restriction of availability of supply of raw materials. So, in that kind of situation, the more the volume and turnover, the more the profits,” he said.

Shankar said the companies approached them expressing an interest in bottling VTY water.

He would not reveal details, saying talks were ongoing.

“First, we want to iron out differences and come to a level playing field where everybody benefits from the partnership,” Shankar said.

The VTY water was being bottled by Island Chill, a company owned by the Dayal Group of Companies.

In an interview with FijiLive on August 28, Island Chill managing director Jay Dayal said FMF had prematurely exited its five-year contract.

He said according to the contract, FMF was prohibited from entering into any other arrangement with another bottling company.

FMF Group boss Hari Punja denied this saying the contract was very much intact.

Shankar also denied Dayal’s statement saying FMF had not exited and that the two companies were “sorting out our differences”.

“We haven’t exited the contract but there are some differences. You see, any partnership is based on mutual benefits. If one party is having more benefits, it would be detrimental for the other party.

“Naturally, we will think of ways and means of safeguarding our interest. That’s what that happened. So we are trying to sort out the differences,” he said.

He said part of the differences was pricing.

“But I would like to point out that in total, the business of VTY when compared to the total turnover of our group is less than 0.5 per cent ($400,000 a year). It is not significant,” he said.

In addition, Shankar said Island Chill could not also restrict FMF from venturing into other agreements with interested co-manufacturers of bottled water.

“That is illegal. For fair trading, you can’t restrict competition, so that particular clause is illegal in the agreement.”